ECB May Have Exhausted the Room to Cut Interest Rates - BBH
ECB May Have Exhausted the Room to Cut Interest Rates - BBH
Research Team at BBH, suggests that the euro turned higher in the middle
of the Draghi's post-ECB press conference last month when he indicated
(yet again) that the central bank may have exhausted the room to cut
interest rates (with a minus 40 bp deposit rate).
Key Quotes
“Several
ECB officials have subsequently downplayed this assessment, though some
claimed Draghi's remarks were evidence of a secret agreement struck in
Shanghai at the end of February. The minutes of the meeting showed that
there was a discussion of a deeper rate cut, which also implies that
the floor (if there is one) is rather soft.
Although it is
unreasonable to expect the ECB to take more action before it can
implement and monitor the measures it has already announced, investors
should be wary of renewed political and economic stresses. The Dutch
rejection of the associational agreement with Ukraine is an expression
of anti-EU sentiment in a core country and presents a challenge. Spain
appears headed for new elections that will likely be scheduled around
the UK referendum at the end of June. Before then, there are municipal
elections in early May in the UK and Italy.”
(Market News Provided by FXstreet)
